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Changing regulation has enabled greater access to broader pool of potential investors for startups. 

You can now put out marketing and advertising of your need to raise money in certain cases. Platforms like the ones we cover help you to raise money while complying with the laws. Now you can take your new or growing businesses and reach further than you ever have before.

 

Advice for Raising Capital from the Experts

Find a Lead Investor

 

 

Legal

Looking for legal assistance? Check out our list of attorneys and law firms and  Additional info on Term sheets

 

University Research

The Coleman Fung Institute for Engineering Leadership at UC Berkeley

A team of researchers have identified key elements to reaching a funding goal on equity-based crowdfunding platforms, using empirical evidence from the Australian Small Scale Offerings Board (ASSOB). Gerrit Ahlers, Douglas Cumming, Christina Günther and Denis Schweizer wrote the paper "Signaling in Equity Crowdfunding," identifying several critical success factors, which include:

  1. The number of board members;
  2. The level of education (measured by MBAs) of the board and management, and their network;
  3. Planned exit, whether it be an IPO, trade sale, leveraged buyout or reverse takeover;
  4. Financial projections, or a disclaimer — a written reason for not stating projections;
  5. Length of time in business;
  6. Personal wealth invested;
  7. Percent of company they are willing to give up or amount of equity offered.

An entrepreneur who successfully raised money on RockThePost, Shahab Kaviani, CEO of CoFoundersLab, shared tips in the Washington Post. Below are his points I feel are most important:

  1. Zero in on who you believe can be the lead investor;
  2. Be willing to travel to investors;
  3. Send updates on committed investments;
  4. Get feedback from investors;
  5. Exude confidence.

"Do you really want dumb money?" Barry Schuler, former CEO of America Online, was quoted posing this question in Forbes. There will be varying levels of commitment and intelligence in all sources of capital, but I argue that crowdfunding democratizes finance and brings together collective wisdom. That said, when considering the crowdfunding route, there are some issues to be aware of:

  1. Reporting burden;
  2. Time spent performing investor relations;
  3. Bad Actor requirements (CrowdCheck now offers a tool to ensure you comply)
  4. Future rounds of financing and venture capital models.

This innovation will help business creation and job growth, as well as disrupt financial markets. I hope these suggestions help those looking for resources to raise the necessary capital to build inspirational new companies.

 

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Investor Fees/Cost Minimum Investment Focus Due Diligence

5%

$10 Equidy & Crypto

Less than 5% acceptance rate. They review the pitch deck, conduct screening calls, and complete independent research.

10% carried interest

$1,000 Accredited Equity

5-7%

$100 Equity

Minimum as required by law. You are responsible for conducting your own due diligence.

20% carry on 5x 25% beyond 5x returns, 2% management/year, 4% fee reserve

$10,000 Accredited Equity

1-2% of companies make it through the reviews & selection process.

7%

$100 Equity

Minimum required checks by regulators like background checks.

$100 Real Estate

free

$5,000

Transaction fee of 2.85% of your total investment but will not exceed $37.25

$100 Debt
$2,500 Secondary Equity
$1,000 CPG Equity
$100 Debt

They note they conduct background checks on the issuer and its principals, and ensure a reasonable basis for believing...

$10,000

Relationship with Crowdcheck. Investors are solely responsible for conducting any legal, accounting or due diligence...

0.5% per transaction

$0 Crypto

Token Sale Manager process which we assume should create a high bar to be able to list a project/token. tied to the $20k...

2%

$500 Equity & Crypto

~1% of startups that apply by employing its own due diligence process so you get only highly vetted startups. "In the...

5% + 10% Carried interest

$100 Equity

Less than 0.5% of companies who apply get listed. This process of company vetting saves you time. The average amount of...

10% Carried Interest

$3,000

1-2% of companies are selected.

$250 Equity

Minimum required by law.

$100,000

0%

$1,000 Equity & Rewards

2% Management Fee, 20% Carried Interest on returns up to 5x, 25% on anything above

0

$100 Equity

0%

$250 Agriculture Equity

0

$99

They employ the minimum checks, curation, or due diligence of the investment offerings required by law. You must rely on...

$50,000 IPO, Direct Listings
$1,000

They perform minimum required vetting to list an offering.

$200 Cannabis Equity

2% - min $3.50, max $75

$100

2% platform fee. Syndicate Investments one-time 7.5% platform fee & 10% carry

$5,000

adheres to the minimum FINRA guidelines on conducting due diligence.

$200

fixed $10 flat and no set %

$100

Minimum as required by law.

0

$10 Retail Investor

SMBX analyzes the financial history to review the profitability. They employ an underwriting team to do this...

$250

0

$100
$100 Real Estate
Real Estate
$100

3% of businesses get listed to pass NextSeed's objective diligence criteria to launch an offering on the platform. More...

$122
$0
SMBX
WR Hambrecht + Co
Mercury iFunds
FundersClub
Small Change
NetCapital